What is Entrepreneur?

Meaning

The term 'Entrepreneur' has been derived from a French word 'Entreprendre' meaning to undertake certain activities. To start an enterprise whether big or small; land, labour, capital and management are required. But above all there should be someone who takes decision to start a venture and is prepared to take the risk in case venture does not succeed. The Entrepreneur is a person who takes an initiative to start an enterprise with a view to earn profits but is prepared to take risk of failure. Normally, entrepreneur has to perform two types of functions which are explained here with the help of pictures given below.

Factors of production viz. land, labour and capital are scattered at different places. All these factors have to be assembled together. This work is done by enterprise through entrepreneur. This is an 'Organization Function'. Organization function is the work of bringing the required factors together and making them work harmoniously.

Entrepreneur has to bear risks and uncertainties. For facing uncertainties he may get profit or may incur loss. This is the 'Risk Bearing Function' and entrepreneur is the risk bearer.

Qualities / Skills of an Entrepreneur

To be a successful and ideal entrepreneur, one should have certain qualities or skills as given below :1. Ability to organize : He should be able to organize various factors effectively. He has to understand all the aspects of the business. 2. Professional approach : He should be objective and professional in approach. 3. Risk bearer : He should be risk taker. He should be ready to bear risk and uncertainties. 4. Innovative : Organiser should be innovative. He should adopt modern techniques of production. He should not be reluctant to changes. 5. Decision Making : One has to take right decision at a right time by showing his promptness. Quick decisions are expected but hasty decisions shouldn't be taken. Delay in decisions may increase cost of project and reduce the profits. 6. Negotiation skills : Businessman regularly comes into contact with various persons like consumers, workers, government officials, etc. so he should communicate tactfully. 7. Disciplined These individuals are focused on making their businesses work, and eliminate any hindrances or distractions to their goals. They have overarching strategies and outline the tactics to accomplish them. Successful entrepreneurs are disciplined enough to take steps every day toward the achievement of their objectives. 8. Confidence The entrepreneur does not ask questions about whether they can succeed or whether they are worthy of success. They are confident with the knowledge that they will make their businesses succeed. They exude that confidence in everything they do. 9. Open Minded Entrepreneurs realize that every event and situation is a business opportunity. Ideas are constantly being generated about workflows and efficiency, people skills and potential new businesses. They have the ability to look at everything around them and focus it toward their goals. 10. Self Starter

Entrepreneurs know that if something needs to be done, they should start it themselves. They set the parameters and make sure that projects follow that path. They are proactive, not waiting for someone to give them permission. 11. Competitive Many companies are formed because an entrepreneur knows that they can do a job better than another. They need to win at the sports they play and need to win at the businesses that they create. An entrepreneur will highlight their own companys track record of success. 12. Creativity One facet of creativity is being able to make connections between seemingly unrelated events or situations. Entrepreneurs often come up with solutions which are the synthesis of other items. They will repurpose products to market them to new industries. 13. Determination Entrepreneurs are not thwarted by their defeats. They look at defeat as an opportunity for success. They are determined to make all of their endeavors succeed, so will try and try again until it does. Successful entrepreneurs do not believe that something cannot be done. 14. Strong people skills The entrepreneur has strong communication skills to sell the product and motivate employees. Most successful entrepreneurs know how to motivate their employees so the business grows overall. They are very good at highlighting the benefits of any situation and coaching others to their success. 15. Strong work ethic The successful entrepreneur will often be the first person to arrive at the office and the last one to leave. They will come in on their days off to make sure that an outcome meets their expectations. Their mind is constantly on their work, whether they are in or out of the workplace. 16. Passion Passion is the most important trait of the successful entrepreneur. They genuinely love their work. They are willing to put in those extra hours to make the business succeed because there is a joy their business gives which goes beyond the money. The successful entrepreneur will always be reading and researching ways to make the business better.

Successful entrepreneurs want to see what the view is like at the top of the business mountain. Once they see it, they want to go further. They know how to talk to their employees, and their businesses soar as a result.

Nature & Characteristics of Entrepreneurship:

(1) Innovation: A businessman, who simply behaves in traditional ways, cannot be an entrepreneur. Innovation involves problem solving and the entrepreneur is a problem solver. According to Schumpeter entrepreneurship is a creative activity. An entrepreneur is basically an innovator who introduces something new in the economy.

(2) High Achievement: People having high need for achievement are more likely to succeed as entrepreneurs. The achievement motive is, by assumption a relatively stable enduring characteristic of an individual. Achievement motive can be increased by deliberate efforts. Various studies on psychological roots of entrepreneurship reveal the presence of high achievement among successful entrepreneurs.

(3) Managerial Skill and Leadership: According to B.F. Hoselitz, managerial skills and leadership are the most important facets of entrepreneurship. Financial skills are only of secondary importance. A person who is to become an industrial entrepreneur must have more than the drive to earn profit. He must have the ability to lead and manage.

(4) Group Level Pattern: Entrepreneurial characteristics are found in clusters which may qualify themselves as entrepreneurial groups. Entrepreneurial activity is generated by the particular family background, experience as a member of certain groups and as a reflection of general values.

(5) Organisation Building: According to Harbison entrepreneurship implies the skill to build an organisation. Organisation building ability is the most critical skill required for industrial development. This skill means the ability to multiply one self by effectively delegating responsibility to others.

(6) Gap Filling Function: The most significant feature of entrepreneurship is gap filling. It is the job of the entrepreneur to fill the gap or to makeup the deficiencies which always exist in the

knowledge above the production function. Some inputs like motivation and leadership are vague and their output is indeterminate. An entrepreneur has to Marshall all the inputs to realise the final product.

(7) Status Withdrawal: According to Hagen creative innovation or change is the fundamental feature of economic growth. An entrepreneur is a creative problem solver interested in things in practical and technological realm. He feels a sense of increased pleasure when facing a problem and tolerates disorder without discomfort. In traditional societies, position of authority was granted on the basis of status, rather than individual ability. Hagen visualized an innovative personality in contrast to such authoritarian personality.

(8) A Function of Social, Political and Economic Structure: Entrepreneurs are not equally distributed in the population. Minorities have provided most of the entrepreneurial talent but all the minorities are not important sources of entrepreneurship. Entrepreneurial supply depends upon the four structure viz. limitation structure, Demand structure, opportunity structure and labour structure. However entrepreneurship depends on rather specific combinations of circumstances which are difficult to create and easy to destroy.

Functions of an Entrepreneur
Entrepreneur is a central point to process of production and all other factors like capital, land, labour cluster around him. He performs following functions.

1. Entrepreneur initiates the business activity

He has to start the business activity by preparing a proper plan. The plan should deal with the type of goods or service to be produced, sources of raw material and credit, type of technology to be used, the markets where the products can be sold, etc. The plan should be detailed one covering all the aspects of the business.

2. Entrepreneur organises the factors of production

The entrepreneur has to collect all the other factors of production and combine them in the right proportion.

3. Entrepreneur is a decision maker

Business involves variety of decisions to be taken. The entrepreneur has to decide about the nature of product, technology, price policy, advertisement strategy, employment of labour, etc. A proper strategy has to be adopted by him to take the right decision.

4. Entrepreneur co-ordinate things effectively

A business firm consists of a number of departments. He has to co-ordinate various units effectively by having proper communication channels and supervision.

5. Entrepreneur tries to introduce innovations

According to Prof. Schumpeter, the true function of an entrepreneur is introducing innovations. Innovations imply introduction of a new product, discovering a new product, introduction of a new technology or new method of production etc. Innovation involves risk. The entrepreneur may get profit or may incur loss. Hence, few entrepreneurs try to introduce innovations. By innovating, they contribute to technological process of the economy and accelerate the growth and development.

6. Entrepreneur handles budget of his business

The entire budgeting process is the responsibility of the entrepreneur. He has to mobilize resources for the implementation of the business plan. All other factors have to be paid contractual payments. He gets the residual income, he has to make provision for future investments for expansion and diversification. He has to maintain a balance between income and expenditure.

7. Entrepreneur bears risk and uncertainty

This function distinguishes the entrepreneur from other functions while other factors need not bother about risk and uncertainties, entrepreneur has to bear risks and uncertainties while risks are insurable, uncertainties cannot be insured. E.g. risk like fire, theft, etc. can be insured. Uncertainties like changes in tastes, fashions, cannot be insured. While facing these uncertainties entrepreneur may get profit or may incur loss. Thus, risk and uncertainty bearing is one of the unique function of an entrepreneur.

Thus the entrepreneur is the pivot around which all the activities of the firm revolve around. He is the one who gives direction to the business firms & ensures its effective operation.

Entrepreneurship (Meaning)
The capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit. The most obvious example of entrepreneurship is the starting of new businesses.

Features of Entrepreneurship
The entrepreneur as an organizer of the process of production is the fore-runner of economic development of a country.

1. Scare human resource

Entrepreneurship is a very scarce human factor as it involves specific talent, organizational capacity, innovative sprit and boldness to bear risk which is not found in every person. In developing countries like India lack of entrepreneurship is a major impediment to development.

2. Heterogeneous factor
Entrepreneurship is a heterogeneous factor of production because efficiency, talents, organizing skills, ability to bear risk, foresights and innovating capacities, etc. vary from entrepreneur to entrepreneur. The nature of enterprise varies with various forms of business organizations like sole trading, partnership, co-operatives, Joint Stock Company and public undertakings. In a small business, the same person may work as an entrepreneur, manager and capitalist.

3. Indispensable factor
In modern business entrepreneur is a very important factor of production as he organizes production of goods & services by coordinating the other factors in an optimum way. He is an organiser & owner of the firm. Production is impossible in his absence.

4. Intangible factor
Entrepreneurship is an abstract phenomenon. It is intangible. Entrepreneurial efforts cannot be measured in quantitative terms while we can measure in terms of hours of work and number of days. We can calculate the number of individual workers and their contribution to the firm but it is not possible to measure entrepreneurship as the firm itself is the enterprise.

5. Highly mobile
Of all factors entrepreneur possess a higher degree of mobility as he can easily move from one industry to another or from one region to another. An entrepreneur's ability to move from one industry to another depends upon his knowledge, experience and specialization.

6. Cannot be Bought & Sold

Land labour and capital can be bought and sold in factor markets but it is not possible to deal with entrepreneurs in a factor market. Since enterprise is an intangible factor, it cannot be bought and sold. Hence, like land, labour and capital market there is no entrepreneurial market where entrepreneurship can be bought and sold. Transaction is not possible in case of enterprise. We cannot derive the demand and supply curves in case of entrepreneur. Hence, the Demand and Supply Theory of value cannot be applied to the factor enterprise or organization to determine its price.

7. Residual reward
Entrepreneurship is a reward in terms of profit which is a residual reward, i.e. an income which is left after meeting all business expenses from the total sales revenue.

Role of an Entrepreneur in Economic Development

The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering economic growth and development. Entrepreneurship is one of the most important input in the economic development of a country. The entrepreneur acts as a trigger head to give spark to economic activities by his entrepreneurial decisions. He plays a pivotal role not only in the development of industrial sector of a country but also in the development of farm and service sector. The major roles played by an entrepreneur in the economic development of an economy is discussed in a systematic and orderly manner as follows. (1) Promotes Capital Formation: Entrepreneurs promote capital formation by mobilising the idle savings of public. They employ their own as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial activities lead to value addition and creation of wealth, which is very essential for the industrial and economic development of the country. (2) Creates Large-Scale Employment Opportunities: Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic problem of underdeveloped nations. With the setting up.of more and more units by entrepreneurs, both on small and large-scale numerous job opportunities are created for others. As time passes, these enterprises grow, providing direct and indirect employment opportunities to many more. In this way, entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation.

(3) Promotes Balanced Regional Development: Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas. The growth of industries and business in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc. Setting up of more industries lead to more development of backward regions and thereby promotes balanced regional development. (4) Reduces Concentration of Economic Power: Economic power is the natural outcome of industrial and business activity. Industrial development normally lead to concentration of economic power in the hands of a few individuals which results in the growth of monopolies. In order to redress this problem a large number of entrepreneurs need to be developed, which will help reduce the concentration of economic power amongst the population. (5) Wealth Creation and Distribution: It stimulates equitable redistribution of wealth and income in the interest of the country to more people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial activities also generate more activities and give a multiplier effect in the economy. (6) Increasing Gross National Product and Per Capita Income: Entrepreneurs are always on the look out for opportunities. They explore and exploit opportunities,, encourage effective resource mobilisation of capital and skill, bring in new products and services and develops markets for growth of the economy. In this way, they help increasing gross national product as well as per capita income of the people in a country. Increase in gross national product and per capita income of the people in a country, is a sign of economic growth. (6) Improvement in the Standard of Living: Increase in the standard of living of the people is a characteristic feature of economic development of the country. Entrepreneurs play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in large scale that too at a lower cost. This enables the people to avail better quality goods at lower prices which results in the improvement of their standard of living. (7) Promotes Country's Export Trade: Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of economic development. They produce goods and services in large scale for the purpose earning huge amount of foreign exchange from export in order to combat the import dues requirement. Hence import substitution and export promotion ensure economic independence and development.

(8) Induces Backward and Forward Linkages: Entrepreneurs like to work in an environment of change and try to maximise profits by innovation. When an enterprise is established in accordance with the changing technology, it induces backward and forward linkages which stimulate the process of economic development in the country. (9) Facilitates Overall Development: Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an enterprise is established, the process of industrialisation is set in motion. This unit will generate demand for various types of units required by it and there will be so many other units which require the output of this unit. This leads to overall development of an area due to increase in demand and setting up of more and more units. In this way, the entrepreneurs multiply their entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus for overall development of the area.

Employment Generation Unemployment is a chronic problem of underdeveloped countries. Entrepreneurs generate largescale employment to the unemployed. An entrepreneur creates self employment and offers jobs to million others by starting many industrial units they offer jobs to millions. Entrepreneurship is certainly the best way to fight the evil of unemployment. In this way, entrepreneurs play an effective role in reducing poverty in the country which in turn aids in economic development of the nation. Fair regional development Entrepreneurs are usually forced to set up industries in smaller towns far from big cities in view of the increasing competition in the cities. The growth of industries and businesses in the smaller towns lead to a large number of public benefits in those areas like transportation, health, education and entertainment. Thereby entrepreneurs promote regional development. Increase in National income Entrepreneurs always keep their eyes open for opportunities. They explore and utilize opportunities, make effective resource mobilization of capital and skill, raise new goods and services and develop markets for growth of the economy. The goods and services produced are for consumption within the country and to meet the demand of exports. Thus the national income is increased and increase in national income is certainly a sign of economic growth. Reduction in concentration of economic power

Economic power is the normal outcome of industrial and business activity. Industrial development normally may lead to concentration of economic power in the hands of a few individuals which results in the growth of monopolies. To rectify this problem, a large number of entrepreneurs need to be developed, who will help in dispersing the economic power amongst the population. Betterment in Standard of Living Improvement in the standard of living of the people is a quality feature of economic development of the country. Entrepreneurs play a key role in increasing the standard of living of the people by taking on newest innovations in the manufacture of goods and services at lower price. This allows the people to get better quality goods at lower costs which results in the betterment of their standard of living. Further, to retain the entrepreneurial approach to economic growth, India must now provide opportunities for education directed specifically at entrepreneurial skills. Financing of entrepreneurial efforts and networking among potential entrepreneurs must also be aided by the Government. Though the Indian Government offers policies encouraging the entrepreneurial efforts, the Governments overall role should be lessened so that the authority of the free market and individual self-interest can be appreciated.

1) Employment Generation : Growing unemployment particularly educated unemployment is the problem of the nation. The available employment opportunities can cater only 5 to 10 % of the unemployed. Entrepreneurs generate employment both directly and indirectly. Directly, self employment as an entrepreneur and indirectly by starting many industrial units they offer jobs to millions. Thus entrepreneurship is the best way to fight the evil of unemployment.

2) National Income : National Income consits of the goods and services produced in the country and imported. The goods and services produced are for consumption within the country as well as to meet the demand of exports. The domestic demand increases with increase in population and increase in standard of living. The export demand also increases to meet the needs of growing imports due to various reasons. An increasing number of entrepreneurers are required to meet this increasing demand for goods and services. Thus entrepreneurship increases the national income.

3) Balanced Regional Development : The growth of Industry and business leads to a lot of Public benefits like transport facilities,

health, education, entertainment etc. When the industries are concentrated in selected cities, development gets limited to these cities. A rapid development . When the new entrepreneurers grow at a faster rate, in view of increasing competition in and around cities, they are forced to set up their enterprises in the smaller towns away from big cities. This helps in the development of backward regions.

4) Dispersal of economic power : Industrial development normally may lesd to concentration of economic powers in a few hands. This concentration of power in a few hands has its own evils in the form of monopolies. Developing a large number of entrepreneurers helps in dispersing the economic power amongst the population. Thus it helps in weakening the harmful effects of monopoly.

5) Better standards of living : Entrepreneurers play a vital role in achieving a higher rate of economic growth. Entrepreneurers are able to produce goods at lower cost and supply quality goods at lower price to the community according to their requirements.When the price of of the commodies decreases the consumers get the power to buy more goods for their satisfaction. In this way they can increase the standard of living of the people.

6) Creating innovation : An entrepreneur is a person who always look for changes. apart from combining the factors of production, he also introduces new ideas and new combination of factors. He always try to introduce newer and newer technique of production of goods and services. An entrepreneur brings economic development through innovation.

Entrepreneurship also helps in increasing productivity and capital formation of a nation. In short, the development of the entrepreneurship is inevitable in the economic development of the country. The Role played by the entrepreneurship development can be expressed in the following words : " Economic development is the effect for which entrepreneurship is a cause "

Entrepreneurial Decision Process

Entrepreneurial decision process is about deciding to become an entrepreneur by leaving present activity i.e. a movement from the present lifestyle to forming a new enterprise. The decision to start a new company occurs when an individual perceives that forming a new enterprise is both desirable and possible. The decision to become an entrepreneur to start a new business consist of several sequential steps1. The decision to leave a present career or lifestyle (pushing and pulling influences active in the decision to leave a present career or lifestyle 2. The decision about desirability of new venture formation i.e. the aspects of a situation that make it desirable to start a new venture and this relates to culture, subculture, family, teachers and peers. 3. The decision about possibility of new venture formation i.e. factors making it possible to create a new venture like government, background, marketing, financial, role models.

Desirability of new venture formation :- (aspects of a situation that make it desirable to start a new company) 1. The perception that starting a new company is desirable results from an individuals culture, subculture, family, teachers and peers. american culture places a high value on being your own boss, being a success and making money therefore, it is not surprising to find a high rate of company formation in the united states. on the other hand in some countries making money is not as valued and failure may be a disgrace. The rate of business formation in these countries is not as high.

2.

Many subcultures that shape value systems operate within a cultural framework.

in the u.s. they include route 128 (boston), silicon valley (california), and north carolina triangle. In india they include marwari, gujrati, and rajasthani businessmen. these subcultures support and even promote entrepreneurship.

3. Studies indicate that a high percentage of founders of companies had fathers and/or mothers who valued independence. 4. Encouragement to form a company is also gained from teachers, who can significantly influence individuals. 5. 6. An area having a strong educational base is also a requirement for entrepreneurial activity. Peers are important, also, as is an area with an entrepreneurial pool and peer-meeting place.

Possibility of new venture formation : - (factors making it possible to create a new venture) Although the desire of new venture formation derived from the individuals culture, subculture, family, teachers and peers needs to be present before any action is taken, the second feature necessary centers around this question what makes it possible to form a new company? 1. The government contributes by providing the infrastructure to help a new venture.

the india has the necessary roads, communication and transportation systems, utilities, and Economic stability the indian tax rate for companies and individuals is better than in some european countries. 2. The entrepreneur must have the necessary background.

formal education and previous business experience give a potential entrepreneur the skills needed to form and manage a new enterprise. although educational systems are important in providing the needed business knowledge, individual will tend to be more successful in forming in fields in which they have worked.

3. The market must be large enough and the entrepreneur must have the marketing know-how to put together the entire package. 4. 5. 6. The entrepreneur must have the marketing know-how to put together the entire package. A role model can powerfully influence the perception of venture possibility. Finally, financial resources must be readily available.

although most start-up money comes from personal savings, credit, and friends, but there is often a need for additional capital. risk-capital availability plays an essential role in the development and growth of entrepreneurial activity.